Mortgages referenced to real interest rates and indexed to inflation can help to reverse the present debt-deflation process, offer a frame of stability for housing markets, increase homeownership and stimulate the economy.
See our reasons, debate them with us and help us to feature a proposal!
See our reasons, debate them with us and help us to feature a proposal!
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What is a real rate inflation-indexed mortgage?
Real rate inflation-indexed mortgages (RIMS) are mortgage loans that bear a reference to real interest rates and are inflation-indexed. This means: a) The real interest rate is the benchmark for this kind of mortgages instead of the nominal interest rate. b) Loan payments increase according to an inflation index. Which are the main potential benefits of RIMs for the economy? RIMs have many potential benefits for the economy: a) The stabilization of the housing market. b) Prices can grow up to 60% from present levels in the USA (Oct 2011). c) Increase homeownership ratios. d) Clean balance sheets of households and lenders. e) Increase consumption due to the whealth effect, more families having acces to credit (clean balance sheets) and lower initial loan payments. f) Aims can be achieved without public spending or taxes. g) Protect the housing market from inflation volatility. Take a brief overview of the issue |
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This is a proposal. We will be glad to update it with your comments. Thank you.
